Former business secretary Lord Peter Mandelson has said there has been a mistaken impression of Brexit’s economic effects on the UK.
The negative economic effects of Brexit will happen gradually not rather than in one big hit, according to the Labourite.
Lord Mandelson, a central figure in New Labour who served under the last Labour government, said Remainers were “mistaken”. The Remain campaign was wrong to suggest there would be a single big economic hit from leaving the union.
He warned that Brexit was “the elephant in the room” when it came to industrial policy. In addition, he said exit from the single market would intensify problems for business caused by leaving the EU.
Over time, businesses would face border tariffs, customs barriers, frictional cost and regulatory disruption and interruption of trade. He recently told the House of Commons business committee that severe deterioration in the UK business environment may be inevitable.
“This deterioration is not going to happen straight away. That was the mistaken impression, in my view, given in the referendum.
“It will be a gradual, inexorable worsening of conditions in the UK. That’s why people saying it all seems to be going OK so far are missing the point – it hasn’t even kicked off yet.
“There are basic choices, hard or soft, which must be got right first. If we get Brexit wrong I don’t think industrial strategy in itself will be able to correct the consequences of a hard Brexit”.
He added that UK can separate itself as fast and as far as possible from the EU and the single market. This is what is called a hard Brexit. Alternatively, we could “minimise the break and the resulting risk to the UK economy. I’m in the second camp, I want to maximise our continued participation in the single market”.
The Government says it wants to secure the “best possible access” to the single market. He cited however that the UK is also restricting the freedoms of EU citizens to move to the UK.
Brexit Secretary Davis Davis has previously said the UK would likely leave the single market, or that it could pay for access to it.
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